This year has been exceptionally favorable for the social media industry. To illustrate, on February 2, Meta Platforms (NASDAQ: META) surged to set a record for a single-day price jump in Wall Street history. However, as the dust settles, eyes have turned towards the most recent social media stock surprise.
Today’s name is also among the world’s largest social platforms, with a household brand name and a somewhat eccentric reputation. Nonetheless, its IPO on March 21 has driven investors into a frenzy. This article will cover Reddit (NYSE: RDDT), the newest entry into social media stocks, and analyze whether it can capitalize on its highly successful initial public offering (IPO).
Reddit IPO achieves critical success
On March 21, Reddit debuted on the New York Stock Exchange and surged to a peak of $57.80 before settling at $50.44.
This value is 48% higher than the $34 per share the social platform initially offered to the public. By the end of the trading day on March 22, RDD settled at $46, which is a rebound of nearly 9%. Stock volatility is not unusual, especially if we account for the buzz Reddit made and the fact that day traders likely seek to profit from RDDT’s early days.
The company’s early investors comprise some pretty influential tech names, including the CEO of OpenAI, Sam Altman, who is one of Reddit’s largest stockholders, holding 12.2 million shares at the time of the IPO.
Reddit’s initial valuation was nearly $9 billion, which settled at about $7.4 billion post-IPO (as of March 25). The amount pales compared to its rival social media platforms. It remains a fraction of Meta’s $1.28 trillion market capitalization, which is odd considering that Facebook is a year and a half older than Reddit.
Reddit’s stock performance and financial history
Despite its enchanted global audience, Reddit has suffered from a nearly two-decade-long streak of consecutive losses, and its net loss is currently at $90.8 million. The company reportedly intends to solve the issue by discovering ways to monetize its significant reach and increase revenue.
Non-profitability is not the company’s only issue, as tumultuous management and user revolts hinder Reddit’s long-term sustainability.
Steve Huffman and Alexis Ohanian founded Reddit in 2005, then sold it to Conde Nast Publications in 2006. It was subsequently spun off in 2011, and the company stated in its IPO filing that generating revenue was not among its primary goals until 2018. In the meantime, the company. The company’s management went over several transitions, with Huffman and Ohanian leaving Reddit in 2009, only to return five years later. After Ohanian requested to be replaced by a black candidate in the wake of the George Floyd murder, Huffman remained as the CEO of the company.
However, over the years, Reddit has amassed a large and loyal audience devoted to the social media platform, with 76 million users checking in in December 2023. The site discusses a diverse range of topics, from random memes to physics and business. As an example of Reddit’s influence, the platform initiated one of history’s most prominent short squeezes, the GameStop (NYSE: GME) 2021 short squeeze.
Reddit stock price today
Reddit stock price currently stands at $50.50, but it remains highly volatile due to being public for less than a week.
About Reddit
It primarily allows users (commonly known as “Redditors”) to submit content, including text, images, and videos, which other Redditors then vote up or down. Posts are organized by various Reddit communities and moderators into “subreddits” and get placed on the page according to the number of upvotes. As of March 2024, Reddit is the 15th most-visited site worldwide.Â
The company was founded in 2005 and went through its IPO on March 21, 2024. It is based in San Francisco. Reddit’s stock trades on the NYSE under the RDDT ticker.
What is the forecast for Reddit stock?
Reddit’s IPO has been rather impressive. However, it still has several fundamental factors to sort out before it can start planning a sustainable corporate future. For example, in 2023, the company reported $804 million in revenue and remained unprofitable, with net losses of $90.8 million. Furthermore, its controversial $60 million deal with Google over an AI-related project has already drawn the attention of the Federal Trade Commission.Â
Reddit can still potentially benefit from the meme stocks craze, especially since many investors already utilize the platform. However, with enough optimism and proper corporate guidance, the Reddit stock has the potential to reach the $100 price mark this year.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
